Telecom NZ posts net profit, AAPT flat

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Telecom Corp of New Zealand has announced a surprisingly big
jump in first quarter net profit, boosted by rapid growth in its NZ
internet and mobile phone divisions.

Telecom NZ today reported a 19 per cent rise in net profit to
$NZ193 million for the three months to September 30, 2004, which
was better than analysts' expectations.

However its Australian business, AAPT Ltd, was broadly in line
with the previous first quarter, with operating revenue at $A326
million.

Although the consumer side of the business grew revenue by just
1.3 per cent to $A155 million, the corporate side decreased
operating revenue by 4.5 per cent to $A171 million, compared to the
same period last year.

Nevertheless, Telecom chief executive Theresa Gattung said AAPT
remained "on track", with continued growth in customer numbers and
tailored service offerings.

She said the group's earnings performance overall was also on
track, with the company focussed on greater investment in key parts
of the businesses to drive future growth.

The group's net profit included an abnormal item of $NZ10
million relating to the gain from the sale of 15 business retail
stores to Australian retailer Leading Edge Group in September.

After the abnormal, net earnings were $NZ183 million, an
increase of 13 per cent.

Total operating revenues for the three months to September 30,
2004, were up 4.5 per cent to $NZ1.381 billion.

Telecom said it would pay a fully imputed fourth quarter
dividend of 9.5 NZ cents.

Ms Gattung credited the jump in group earnings to strength in
mobile phones and broadband internet in New Zealand.

"This is a reflection of the investment initiatives that we are
targeting in 2004-2005," Ms Gattung said in a statement.

"In mobile we had the strongest revenue growth in several
quarters, up 13 per cent.

"We'll be launching Telecom's new 3G mobile service, T3G, next
week and we expect this to further stimulate mobile data
growth.

"The quarter was also a record for connection growth for
broadband as we continue to work towards achieving our target of
250,000 residential customers in New Zealand by the end of
2005."

In New Zealand, local service revenue - representing 20 per cent
of total group revenue - fell 1.1 per cent to $NZ267 million.

Revenue from fixed line phones fell even further, down 8.5 per
cent to $NZ227 million, as Telecom suffers from a problem facing
incumbent telcos all around the world, with people shifting away
from landlines to communicating via newer technologies such as
mobile phones and the internet.

Total NZ mobile revenues were up 12.9 per cent to $NZ166
million, and revenue in the NZ data, internet and solutions
division jumped up by a huge 44.4 per cent to $NZ244 million.

In the other smaller NZ divisions, interconnection revenue rose
18.8 per cent to $NZ38 million and directories revenue was up by
3.6 per cent to $NZ57 million.